Liability From Third Party False Marking

This blog post has been updated due to the America Invents Act enacted September 16, 2011.  See Virtual patent marking and false patent marking post.

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Patent false marking has become an increasingly important issue for patentees.  The typical false marking situation begins with a product manufacturer falsely marking its “own” product with an expired patent number, unrelated patent number, or with “patent pending” when no U.S. patent is pending.  The following case shows that a manufacturer may also be sued for incorporating a “third party’s” part falsely marked with a patent number.

Brooks Brothers sells bow ties.  Brooks incorporated a mechanism “Adjustolox” manufactured by a third party – J.M.C. Bow Company into its bow ties.  The Adjustolox was marked with patent numbers that expired in 1954 and 1955.  The maximum potential liability for false patent marking is up to $500 per product sold.  For example, the maximum potential liability for selling 1000 bow ties could be as high as $500,000.  Accordingly, the maximum potential liability for false patent marking is significant and should be addressed when incorporating a third party’s part marked with a patent.

Stauffer purchased some of Brooks’ bow ties and sued Brooks under the false patent marking statute.  Brooks asserted that Stauffer did not have standing to bring the lawsuit since Stauffer was not personally harmed by the false patent marking.  The Court held that the false patent marking statute operates to confer standing upon Stauffer.  The interesting aspect of this case is that Brooks Brothers is being sued because J.M.C. Bow Company marked the component part (i.e., Adjustolox) with the expired patent.  This case illustrates the point that a manufacturer that incorporates a component part marked with a patent number should investigate whether the patent number is properly marked and address the issue with the component part manufacturer early during the process.